US GSP move will not impact Indian textile and apparel industry much!

by Apparel Resources News-Desk

06-March-2019 | 3 mins read

Image Courtesy: knnindia.co.in

The latest announcement by the US to review General System of Preferences (GSP) status of India will not impact Indian textile or apparel industry much. Apparel Resources explored the list of textile and apparel products which are benefited under GSP. In this list of nearly 136 core textile and apparel products, none of them is either the ‘strength’ or produced in large quantities, in India. Women dresses, shawls (not knitted or crocheted), containing 70 per cent or more weight of silk or silk waste is among the products that may have little impact of the latest GSP move, as rest of the products are very much niche with detailed specification.

The US has announced reviewing the GSP eligibility of India, Turkey, Indonesia and Kazakhstan.

As far as India is concerned, the decision may impact some small-scale Indian manufacturers as GSP mostly covers intermediary low-tech products such as shopping bags that are no longer manufactured in the US.

According to Apparel Export Promotion Council (AEPC) there were 15 products under HSN 61 and 62 in readymade category, and contributed worth US $17.97 million to imports from India. These 15 products contribute to less than 0.5 per cent of India’s apparel exports. Overall the US imports $ 586.58 million worth of RMG products under 15 categories that currently enjoy GSP.

However all said and done, even the minimal impact can lead to hundreds of job losses.

The MFN tariff on the 15 products varied from 0.86 per cent to 14.60 per cent, on which India got duty access with 100 per cent Margin of Preference. The product cost for the buyer will increase by 7 per cent.

India is the biggest beneficiary of the GSP among developing countries at US $ 5.6 billion with around 3500 core products getting access to the US. India’s total exports to the US stood at US $ 50.57 billion in 2017 with a GSP tariff advantage of only $190 million, which was less than 0.4% of Indian exports.

On the other hand, according to Turkish Media, Turkey won’t face any major blow due to GSP review as Turkey’s total exports in 2018 were US $ 168 billion and only US $ 8.3 billion went to the US, 4.9 per cent of its total exports. Even, under the GSP programme, in 2017, Turkey’s export to the US was around US $ 1.66 billion.